ZIMBABWE’S cooking oil manufacturers have engaged local banks to fund soya bean growers to boost supply of the commodity to their crushing mills, an industry representative body said.
Busisa Moyo, the president of Oil Expressers Association of Zimbabwe told BH24 that the producers were working on an arrangement were the banks would finance as much as 100 000 hectares at a cost of at least $30 million.
Production of about 100 000 ha would give a potential yield of 200 000 tonnes of soya bean.
Last year, soya bean production increased by 50 percent to 60 000 tonnes from 40 000 tonnes a year ago, but way below the industry’s annual needs of 240 000 tonnes.
“We are in the middle of engaging banks and they are very keen to assist,” Moyo said.
Due to shortage of the oilseeds, cooking oil companies are importing crude soya oil. Crude soya imports for July stood at about $16 million, according to ZimStats.
Moyo, also CEO of Bulawayo-based United Refineries said the producers–whose annual installed capacity is around 400 000 tonnes–did not have enough funding to support the farmers. “We don’t have balance sheets to support the farmers,” he said.
While the arrangement with banks would see the oil producers being the off takers of the commodity, some analysts argue that alone would not sufficiently mitigate the risks that would stem from inability by the farmers to produce optimum yields.
“The biggest threat for the banks is a situation whereby resources are availed to farmers who fail to meet minimum (production) thresholds to repay the loans,” Professor Sheunesu Mpepereki, a lecturer at the University of Zimbabwe told Business Weekly.
“The funding might be availed but our soya bean farmers are not adequately capacitated.
“Furthermore, there is also lack of advisory support services for these farmers from the state.”
He said while banks, the government and the private sector might come up with sound financing facilities, the major setback was lack of expertise among the farmers to grow the crop.
Despite massive rebound in raw cotton production this year, Moyo said the cotton seed had become “less of oil seed” and was now largely used for production of stock feed.
“The impact of increased cotton production will not be very significant,” said Moyo said
Cotton deliveries have now reached nearly 125 000 tonnes, up from 74 000 tonnes after the Government supported about 380 000 small scale farmers. Cotton seed is produced when it is separated from the fibre through a process called ginning.